oil prices fall to five year lows iron ore back below us70 903502014

Crude oil fell again amidst global oversupply and a stronger US dollar. January Brent crude fell sharply by US$2.95 to US$66.09 per barrel, its lowest point since October 2009, whereas US crude fell US$2.66 per cent to US$63.18 per barrel, the lowest since July 2009, according to the Sydney Morning Herald. Iron ore again failed to stay above the US$70.00 mark, as the benchmark price for spot iron ore at Tianjin fell 1.7 per cent in the latest session to US$69.70 per tonne. The steel-making material is within hand-shaking distance of the recent five year-low of US$68, reported The Australian.

Global stocks were down yesterday as fears over slowing growth in Asia and Europe led to investors adopting a cautious approach, while plunging oil prices pressured energy stocks. In the US the S&P 500 fell 0.73 per cent to 2,060.19, while the Dow Jones fell 0.57 per cent to 17,855.57. On the other side of the Atlantic, the FTSE 100 lost 1.05 per cent to 6,672.15 and the Euro Stoxx 50 was down 0.90 per cent to 3,247.99. Ewald Nowotny, who heads the Austrian Central Bank and is a member of the ECB governing council, warned that the Eurozone economy was in the midst of a “massive weakening” and that inflation could fall again in 2015, according to the Financial Times.

Australian stocks, however, swam against the tide. The S&P/ASX200 index closed at 5,372.7, up 37.4 points or 0.7 per cent, while the All Ordinaries index ended at 5,348.9, up 35.30 points or 0.66 per cent.

Health Care was the top performing sector in the ASX gaining 2.13 per cent, boosted by the 2.9 per cent gain in vaccine maker CSL Limited (ASX:CSL), according to the Sydney Morning Herald. Banking stocks rose, despite the warnings contained in the Financial System Inquiry report and concerns over low prices in the commodities space. Banking gainers were Commonwealth Bank of Australia (ASX:CBA) (AU$82.39, +0.92 per cent), ANZ Banking Group (ASX:ANZ) (AU$32.40, +0.93 per cent), Westpac Banking Corp (ASX:WBC) (AU$33.35, +1.03 per cent) and National Australia Bank (ASX:NAB) (AU$32.97, +1.76 per cent).

Energy stocks paid the price for crude’s fall and Woodside Petroleum Limited (ASX:WPL) lost 0.9 per cent to AU$35.39. Miners BHP Billiton Limited (ASX:BHP) (AU$30.10, -1.1 per cent) and Rio Tinto Limited (ASX:RIO) (AU$57.13, -0.02 per cent) fell amidst the bearish outlook for iron ore.

The star stock was Qantas Airways Limited (ASX:QAN) which jumped 13.8 per cent to AU$2.39, following its announcement that it expected to post an underlying profit of at least AU$300 million for the first half of 2014-15.

BHP Billiton Limited (ASX:BHP) has decided to name its proposed new company South32, which will be created through a demerger. This reflects the predominance of the location of its assets in the Southern Hemisphere and the thirty-second parallel south line of latitude which links the two regional centres of the company, namely South Africa and Australia.

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